Thanks to Capital One for sponsoring this post. All opinions are 100% mine – however  I have always been a huge Capital One fan and hope to use their Home Equity products soon!

When people consider ways to increase their wealth, they rarely consider leveraging the equity in their home to help reach that goal. There are so many uses for equity which can range from consolidating debt, paying for your child’s education or even buying an investment property.

How Will You Use Your Home Equity?

Hopefully by now you have checked out Capital One’s handy dandy calculator to determine how much equity you have in your home that you may be able to access. When considering how you will use the equity in your home, there are a few things you want to consider. You want to be clear on how much it will cost you to use these funds and your ability to pay the home equity line of credit or home equity loan back. It is also great to take some time and think about your financial goals and what you want to accomplish over the next few years, as well as financial moves you can make now to help you truly bring those Dreams2Reality!

With there being so many ways that you can use your home equity, it’s great to identify ways that using your home equity will ultimately help you build wealth and reach those financial goals. Let’s chat about a few ways that you and others have used their home equity to increase their wealth and reach their financial goals.

Consolidating Debt

Using your home’s equity to consolidate debt is a common option for many. With home equity interest rates being so low, sometimes as low as 3%, it makes sense to get rid of those high-interest credit cards, and pay them off with your equity. By doing this, you will get out of debt much faster and instead of paying multiple credit card companies, now you will only have to make one payment to your home equity lender. Where I have seen people go wrong is taking this step to consolidate and then continuing to use the high-interest rate credit cards and running their debt right back up! As long as you do not make that silly mistake, using your equity to consolidate your high-interest debt can save you thousands!

“I was able to use the equity in my home to consolidate my credit card debt and it cut my monthly debt payment from $1300 to $350/month!” – Jessica M.

Make Home Improvements

Upgrading your kitchen or adding a room to your home is what most people typically think about when they consider using their equity. This can be a great way to make your home more comfortable for you, while also increasing your property value. Depending on the area of your home that you renovate, it can also help to save you money on your heating bill or other utility bills. According to Remodeling magazine, a mid-range bathroom remodel could cost between $12-20,000, and you could see an average return on investment of 62%! That’s a pretty good return. While other factors can come in play that could affect that return when it comes time to sell your home, it just gives you an idea of how financial rewarding home improvements can be.

Buy an Investment Property

If you are looking to begin building your real estate portfolio, leveraging your home equity can be a great idea to get started! Using equity to make more money or even create another stream of revenue sounds like a great idea to me! In fact, this is one of my favorite uses for home equity. If you are able to identify an additional property that you think you can potentially rent out to bring in additional income or even a home you can fix-up and sell, this may be a great investment. I recently spoke with Michael, a millennial homeowner, who explained that he was able to use the equity in his home to put a down payment on a second property, make some minor aesthetic upgrades to the property and rent the property out, bringing in over $700/month in rental income (after he makes his home equity loan payment)! Now obviously you want to speak with a realtor to help you find the best investment property, but this can be a great use of your home equity funds!

Michael used the equity in his home to buy his first investment property that now brings in over $700/month!

There are so many ways that you can use your home’s equity to make more money, support your children’s goals, save money and bring all your Dreams2Reality! I challenge you to take the first step today in reaching those goals and get your customized rate and loan amount (without affecting your credit score) by visiting CapitalOne.com/home-equity.